What would be net present value of refunding for bond issuer

Assignment Help Finance Basics
Reference no: EM13879756

Case Study: Senior Care enterprises - Bond Refunding

1. If the bond was recalled at the end of 5 years, what would be the yield to call (YTC) for those who purchased the bond when it was issued?

2. Given the information given, what would be the Net Present Value of Refunding for the bond issuer? Show all your calculations. Should the firm proceed with refunding the bonds?

Since it is assumed to be a not-for-profit organization, interest rates before and after will be 6% and 5% respectively. (Remember that not-for-profit cost of debt is generally lower because interest income is not taxable)

3. Assuming that the bond issuer was a not-for-profit organization (costs cannot be amortized for tax savings and there are no tax deductions for costs incurred in year 0), what is the NPV of refunding? (Show your calculations) Should the organization refund the bond?

Reference no: EM13879756

Questions Cloud

The transaction is called going public : When stock in a closely held corporation is offered to the public for the first time, the transaction is called “going public,” and the market for such stock is called the new issue market. It is possible for a firm to go public and yet not raise any..
How much initial capital will be required to start business : What will it cost you to produce and how much initial capital will be required to start the business? How long will it take you to break even?
Calculate the net present value with the wacc : Calculate the net present value (NPV) with the WACC
Compute dow''s basic and diluted earnings per share : In 2013, Merrill's net income was $630,000.
What would be net present value of refunding for bond issuer : Given the information given, what would be the Net Present Value of Refunding for the bond issuer? Show all your calculations. Should the firm proceed with refunding the bonds?
Do employees actions always reflect ethics of the company : Also, if the employee is not an ethical person, the culture of the company will not be conducive for ethics regardless of the situation the outcome is usually the same. Which makes me wonder... do employees' actions always reflect the ethics of th..
Career planning practices in the local and global contexts : Identify the career interventions that you consider will benefit you most in relation to your career. Identify and discuss which interventions will benefit you most at different stages in your career. Analyze why.
Centerline temperature of the rod : (a) What is the centerline temperature of the rod when the surface temperature is 550 K? (b) In a heat -treating process, the centerline temperature of the rod must be increased from Tj = 300 K to T = 500 K. Compute and plot the centerline tempera..
What activity is a burst activity : Draw a project network from the following information. What activity(s) is a burst activity? What activity(s) is a merge activity

Reviews

Write a Review

Finance Basics Questions & Answers

  The exchange rate between u.s. dollars and swiss francs

the exchange rate between U.S. dollars and Swiss francs

  Determine the trade balance between the u.s. and china

Determine the trade balance between the U.S. and China for the most recent five year period. Illustrate the trend over this period with a graph of the data.

  Examine the impact of two different scenarios

Your boss would like you to examine the impact of two different scenarios, adding a modest level of debt and adding a higher level of debt. In particular, your boss would like to consider issuing $1 billion in new debt or $5 billion in new..

  5 million of debt outstanding with a coupon rate of 12

5 million of debt outstanding with a coupon rate of 12. currently the yield to maturity on these bonds is 14 what is

  Calculating going rate of interest on bonds

Suppose a car company sold an issue of bonds with a 10-year maturity, a $1,000 par value-Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?

  What is the price/earnings p e ratio

1) ABC Company has total assets of $795,800. There are 40,505 shares outstanding with a market value of $24 per share. If the net profit margin is 7.8% and the total asset turnover is 2.2, what is the price/earnings (P/E) ratio?

  Compare the calculated financial ratios

Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011). Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.

  What will be the net cash flow for year one of this project

The firm has a tax rate of 30 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $57,000 at the beginning of the project. What will be the net cash flow for year one of this project?

  I need a full one page single-spaced summary and reaction

i need a full one page single-spaced summary and reaction paper. the personal finance article can be from a newspaper

  Delfinos expects to pay an annual dividend of 150 per

delfinos expects to pay an annual dividend of 1.50 per share next year. what is the anticipated dividend for year 5 if

  Calculate average monthly return and standard deviation

Following you will find the end of month values for both the Standard & Poor's 500 Index and Ford Motor Corporation common stock.

  Explain the basic difference between debt and equity

Sometimes it is not clear if a particular security is a debt or equity. Explain the basic difference between debt and equity.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd